- China aims to reduce energy costs to boost domestic adoption of AI chips
- Local governments now reward data centers running Chinese processors over imports
- Major tech companies face difficult trade-offs between efficiency and political loyalty
China is reportedly offering major local cloud and internet companies, including Alibaba, ByteDance and Tencent, electricity subsidies that could cut energy costs by up to half.
Reports of the Financial times They claim that the initiative aims to encourage these companies to run their data center operations on chips produced by local manufacturers such as Huawei and Cambricon.
By targeting large clusters of data centers, local authorities hope to maintain momentum in the development of artificial intelligence while complying with national directives that favor domestic supply chains.
Balancing energy efficiency and industrial policy
The move follows a series of complaints that domestic chips are less energy efficient than Nvidia’s widely used artificial intelligence chips.
Nvidia chips are no longer available to Chinese buyers due to trade restrictions imposed by the United States, but the decision to link cheaper energy to the use of Chinese hardware reflects a broader attempt to protect and expand the country’s semiconductor ecosystem.
The move also exposes tensions between industrial policy and operational efficiency.
Many companies have reportedly struggled with higher running costs since switching to local chipsets, whose performance and power efficiency are still considered inferior to their Western equivalents.
Therefore, subsidies appear designed to offset these disadvantages by reducing the burden of electricity consumption on energy-intensive data center facilities.
Provinces such as Gansu, Guizhou and Inner Mongolia, key hubs for China’s growing cloud infrastructure and artificial intelligence network, are said to be leading the rollout of these discounts.
The policy reportedly allows qualified facilities to reduce their energy bills by up to 50%, but only if their systems rely on domestic rather than imported CPUs and accelerator units.
While the plan signals Beijing’s determination to reduce dependence on foreign technology, its long-term effectiveness remains uncertain.
Subsidized electricity could temporarily mask the efficiency gap between Chinese processors and leading Nvidia designs, but it may not solve the underlying performance problem.
For major platforms deploying AI tools across vast server farms, the balance between political alignment and computational power could prove costly.
At the time of writing, there is no official confirmation of the plan, suggesting the policy may still be in a testing phase.
Follow TechRadar on Google News and add us as a preferred source to receive news, reviews and opinions from our experts in your feeds. Be sure to click the Follow button!
And of course you can also follow TechRadar on TikTok for news, reviews, unboxings in video form and receive regular updates from us on WhatsApp also.
